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CMR carrier held liable for breach of additional contractual obligation

The Supreme Court recently held that a carrier operating under a contract that incorporates the Convention on the Contract for the International Carriage of Goods by Road (CMR) can be liable to its contractual counterparty, even if the carrier has delivered the goods in sound condition and on time. This is the first time that the Supreme Court has held a CMR carrier liable for breach of an additional contractual obligation.

In its judgment of December 18 2015, the Supreme Court held that although the CMR contract in question had ended with the delivery of the goods, the CMR carrier could be liable for damages resulting from the breach of additional contractual obligations.(1) This liability is governed by the national law that applies to the contract of carriage. Therefore, insofar as the CMR Convention does not cover the liability in question, national law will apply.

Facts

The dispute had its origins in shipments of Nokia products from the Netherlands to Russia. Finnish logistics company Schenker OY was instructed to transport Nokia products from Roosendaal in the Netherlands to Moscow. It subcontracted Schenker BV in the Netherlands for the journey from Roosendaal to Hamina in Finland and Schenker subcontracted Transfennica. The Nokia products were loaded into containers provided by Janssens, the carrier that Transfennica had subcontracted for the journey from Roosendaal to the Port of Antwerp.

Each of the shipments had loading reference numbers and the CMR consignment notes stated which shipment was loaded in which container. The containers arrived safely in Hamina. Days before arrival, Transfennica had sent an email to Schenker BV with the container numbers, as requested by Schenker BV. However, Transfennica mixed up two container numbers and, as a result, some loading reference numbers corresponded to the wrong container numbers. Schenker BV forwarded the email to Schenker OY, which subsequently issued customs documents for export from the European Union.

When the road carriers arrived at the Russian border (as instructed by Schenker OY), the Russian authorities detained two of the containers because of mismatching weights and numbers. Schenker OY paid the cost of storage and penalties and forwarded them to Schenker BV, which informed Transfennica that it would offset these costs against the freight cost. Transfennica subsequently brought proceedings against Schenker BV for the full freight amount and Schenker filed a counterclaim for the customs claim.

Court of Appeal decision

The Court of Appeal held that Transfennica was not liable to Schenker BV, as neither the transport order nor the CMR obliged Transfennica to provide Schenker BV with the loading reference and container numbers. The court noted that the contract of carriage can include such an obligation and Schenker BV argued that it was customary in the transport industry to provide such information.

The court held that a CMR carrier's contractual liabilities end when the goods are delivered in sound condition and on time. The customs claim arose only after Transfennica's obligations had been met. The fact that the damage was attributable to Transfennica (which had mixed up the container numbers) was no reason for the court to make an exception to the strict principles established under the CMR and Dutch national law.

Supreme Court decision

The Supreme Court reversed the decision. It stated that the CMR liability regime is not exhaustive. In addition to delay, it deals only with the carrier's liability for loss of or damage to goods. A CMR carrier may be liable for other damages or costs under the national law that applies to the contract of carriage (insofar as the CMR does not already deal with such liability).

Although the contract of carriage between Transfennica and Schenker BV had ended, Transfennica could still be liable for the costs arising from its failure to provide the correct data. The Supreme Court stated that this liability was governed by national law.

Further, the Supreme Court held that the Court of Appeal was incorrect in stating that there can be no liability for carriers under a transport contract if the damage occurs or becomes known only after the transport contract has ended. The Supreme Court held that the decisive point is whether the damage was caused during the performance of the contract.

Legal precedent

In 1994 the Supreme Court had held that the CMR liability regime is not exhaustive, as it relates only to loss of or damage to transported goods.(2) The carrier may be liable under the national law applicable to the contract of carriage for any other damage (eg, the contamination of products transported in a tank trailer by products in a land-based tank).

Comment

CMR carriers and their liability insurers should be aware of the implications of the Supreme Court's decision. Although a CMR contract of carriage may have ended, that does not mean the carrier is no longer liable in the event of damage. However, such liability can easily be excluded or limited by way of a clause in the contract of carriage to that effect. This must be agreed on before or at the time that the contract is executed.

An exclusion or limitation of liability clause can also be part of a carrier's standard terms and conditions, which can then be incorporated into the contract of carriage. This must also be done before or at the time that the contract is executed.

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